From Rs650M to Rs1Billion: Cotton Bay Renovation Costs Under Scrutiny

The renovation of the Cotton Bay Hotel in Pointe-Coton, Rodrigues Island, has ignited a firestorm of scrutiny from the Financial Crimes Commission (FCC), following grave suspicions of irregularities in the management of the project. Initially estimated at a modest Rs 650 million, the total cost has now ballooned to an astonishing Rs 1,024,956,038—an alarming increase of 58%.

Massive budget discrepancies, the signing of contracts prior to board approval, and expenditures deemed “disturbing” by the Prime Minister have compelled the matter to be referred to the FCC.

Constructed in 1991, the Cotton Bay Hotel boasted 60 rooms before the decision to modernise.

Originally owned by Air Mauritius, it was acquired by Airport Holdings Ltd (AHL) in 2021, a company in which the state holds a 51% stake, with the remaining 49% owned by the Mauritius Investment Corporation (MIC).

Cotton Bay – a subsidiary of AHL

On 15 March 2023, the Board of Pointe Coton Resort Hotel Co. Ltd, a subsidiary of AHL, greenlit a comprehensive renovation, which included the construction of an additional 32 rooms, refurbishment of public spaces, and upgrades to technical infrastructure.

At that time, the project was valued at Rs 650 million, excluding VAT.

However, less than three months later, on 12 June 2023, a contract worth Rs 683.5 million, also excluding VAT, was awarded to Laxmanbhai and Co. (Mauritius) Ltd.

Yet, as Prime Minister Navin Ramgoolam clarified in the National Assembly on Tuesday 6th May, “the Letter of Award was signed that day by Ken Arian, director of Pointe Coton Resort Hotel Co. Ltd, without prior approval from the board.”

The board only sanctioned the contract four days later, on 16 June 2023, and formally ratified same on 18 September 2023.

A Cascade of Expenditures

As the months progressed, the total cost of the project continued to swell.

In addition to the primary works, 28 contracts were awarded between May 2023 and April 2024 for the procurement of furniture, kitchen and laundry equipment, and the installation of a desalination plant, amounting to Rs 86.3 million.

Furthermore, nearly Rs 16 million was disbursed to 22 service providers for communications, insurance, training, and IT systems.

A staggering Rs 83.9 million was also allocated to remunerate 12 consultants, including the firm Etwaro & Associates Ltd.

In total, Rs 788.3 million, excluding VAT, has already been paid to various stakeholders, while the final bill is now projected to reach Rs 1.02 billion.

Controversial Management Under the Spotlight

The Prime Minister has condemned “very troubling facts” related to the execution of this project in the National Assembly, particularly highlighting a contract awarding process described as “dubious.”

He announced that the case would be forwarded to the FCC, the newly established body tasked with uncovering potential financial irregularities and conflicts of interest.

As the investigation unfolds, the public watches with bated breath, eager for accountability in a matter that has raised serious questions about governance and transparency in public projects.

Chronology of the Cotton Bay Hotel Renovation Scandal

1991: The Cotton Bay Hotel is initially constructed in Pointe Coton, Rodrigues, featuring 60 rooms.

15 March 2023:

• The board of Pointe Coton Resort Hotel Co. Ltd approves an extensive renovation and expansion project for the hotel.
• The ambitious plan includes the refurbishment of the existing 60 rooms, the construction of 32 new rooms, modernisation of communal areas, technical facilities, back-of-house service zones, as well as the installation of new drainage systems and external infrastructure.
• The estimated cost is set at Rs 650 million, excluding VAT.

12 June 2023:

• A Letter of Award is signed to allocate the works to Laxmanbhai and Co. (Mauritius) Ltd for a staggering Rs 683,501,922.42, excluding VAT.
• This signature is executed by Ken Arian, the company’s director, without prior approval from the board, as revealed by the Prime Minister.

16 June 2023:

• The board retroactively approves the contract signed with Laxmanbhai, thereby validating the negotiated price.

18 September 2023:

• Formal ratification of the contract signed three months earlier takes place.

May 2023 – April 2024:

• An additional 28 contracts are awarded to various suppliers for:
• Furniture
• Kitchen and laundry equipment
• Purchase and installation of a desalination plant
• The total amount for these contracts reaches Rs 86,342,073.63, excluding VAT.
• To date, Rs 78,128,965 has already been disbursed.

Unspecified Period (2023-2024):

• 22 service providers are also engaged for services including:
• Communications
• Training
• IT systems
• Insurance, among others.
• The total amount for these services is Rs 15,962,062, excluding VAT.

Unspecified Period (2023-2024):

• 12 consultants, including Etwaro & Associates Ltd, are compensated a total of Rs 83,918,643 for their advisory services.

Total Amount Committed to Date:

• A staggering Rs 788,347,569 has been expended thus far, excluding VAT.
• The final cost of the project is now estimated at Rs 1,024,956,038, representing a shocking 58% increase over initial projections.
• As the investigation progresses, the implications of this financial debacle are prompting critical questions regarding accountability and governance in public projects undertaken by the previous regime.

Source: Defi Media